Donald Trump does not want Chinese cars manufactured in Mexico entering massively into the United States. But he is willing to accept cars from Chinese brands manufactured by American workers.
The president has exposed this difference in an interview with Fox News at a time when manufacturers and congressmen are pressuring the White House to prevent China from entering the U.S. automotive market.
Trump's condition: produce within the United States
The president's position is based on an idea he has also repeated with Japanese and European companies. If a foreign company wants to sell millions of cars in the United States, Trump prefers that it manufactures within the country and hires local workers.
This opens a possible entryway for Chinese giants that have so far found the U.S. market practically closed.
The U.S. industry does not want to open that door
American manufacturers maintain a much tougher position. The Alliance for Automotive Innovation, which groups companies like General Motors, Ford, and other major manufacturers, is pressuring Congress to pass rules before the end of the year that permanently hinder the entry of Chinese vehicles.
U.S. companies claim that Chinese brands benefit from strong public support and warn about the volume of data that connected vehicles collect.
Tariffs of over 100%
The possible acceptance of Chinese factories does not mean that Trump has dismantled trade barriers. The United States maintains tariffs of over 100% on certain electric vehicles coming from China.
There are also restrictions related to components, software, and connected technologies developed by Chinese companies.
The current strategy makes it practically unfeasible to compete through direct importation.
Mexico remains the red line
Trump made precisely that distinction. He does not want Chinese companies to use Mexico as a low-cost industrial platform to then sell their vehicles in the United States.
This concern has been present throughout his trade policy. The possibility of producing directly in U.S. territory, however, is considered as long as jobs are generated there.
The fear of repeating what happened in Europe
Behind this battle lies the enormous international expansion of Chinese manufacturers. BYD, Geely, and other companies have gained market share in numerous markets, especially thanks to electric vehicles with competitive prices.
Europe has responded with additional tariffs. The United States has so far applied even harsher measures.
The fear of American manufacturers is that allowing Chinese plants opens a market that they currently have protected against some of the fastest-growing global competitors.
A possible contradiction in Trump's strategy
The approach faces two priorities of the president. One is to protect American companies from China. The other is to attract factories, investment, and industrial jobs to the United States.
If a Chinese manufacturer commits to building a U.S. plant with thousands of jobs, both policies may come into conflict.
Trump has just made it clear what his response could be: the company's passport matters, but the place where it manufactures and whom it hires also does.